Daily Investment Strategy
Daily focus：ZTO Express（2057）
ZTO Expressannounced its Q1 2025 results. The company’s parcel volume increased by 19.1% year-on-year, reaching 8.539 billion parcels. Revenue was RMB 10.892 billion, up 9.4% from the same period last year, but still below market expectations of RMB 11.67 billion. Adjusted net profit was RMB 2.259 billion, a 1.6% increase year-on-year, also falling short of the market forecast of RMB 2.35 billion. The revenue miss was mainly due to a larger-than-expected drop in per-parcel revenue, attributed to increased subsidies and a decline in parcel weight. Despite intensified industry competition, ZTO has maintained its full-year parcel volume growth guidance at 20%-24%. However, due to the ongoing price war, the stock price is expected to remain under pressure in the short term.
Markets worry that US spending bill will worsen deficit ratio
U.S. equity markets experienced a significant downturn on Wednesday, with the S&P 500 index shedding 1%. Market sentiment was primarily driven by concerns over the federal deficit, particularly as a proposed Republican spending bill, which includes extending the 2017 tax cuts and raising the debt ceiling by $4 trillion, is anticipated to widen the fiscal gap. These apprehensions contributed to a tepid response in U.S. Treasury auctions, with the 10-year Treasury yield briefly rising to approximately 4.522%. Investors are concerned that to curb potential inflation stemming from government spending, the Federal Reserve may need to maintain elevated interest rates for an extended period, thereby increasing corporate borrowing costs and pressuring equity valuations. Persistent fiscal deficits could further drive up interest rates, undermining long-term economic growth and potentially eroding market confidence in U.S. debt sustainability and the safe-haven status of Treasuries.
Hong Kong Stock Connect recorded a net inflow of HK$1.4bn on Wednesday, of which China Construction Bank (0939) recorded the largest net inflow of HK$690mn, followed by Meituan (3690); Tencent (0700) recorded the largest net outflow of HK$1.3bn, followed by Alibaba (9988).
Leung Kai Tong is a SFC licensed person accredited to KGI Group to carry on regulated activities (for details, please refer to: https://apps.sfc.https://apps.sfc.hk/publicregWeb/indi/ADU276/details). He and/or his associate do not have any financial interest in the recommended issuer or new listing applicant.
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